Starting early and taking proactive steps can pave the way for a gratifying retirement, even though planning for it may appear daunting. The good news is that considering retirement early on is never too soon and can be less challenging than expected.
When envisioning retirement, the goal is typically to replace your workplace salary with other income sources that can sustain your desired lifestyle. While Social Security may contribute to your financial needs, it is reasonable to have concerns about its adequacy. Therefore, it is crucial to rely on personal savings and investments to cover the remaining funds.
To help you estimate the amount you need to save now to receive an annual retirement income of $80,000, $90,000, or $100,000 without depleting your principal, CNBC has conducted calculations.
It's important to note that these calculations are based on certain assumptions. They assume that you will retire at the age of 65 and currently have no savings.
Financial advisors generally suggest gradually shifting your investment portfolio to a more conservative approach as retirement approaches. However, even during retirement, it is advisable to maintain a mix of stocks, bonds, and cash. The calculations assume a conservative annual return rate of 6% while working and an even more conservative rate of 3% during the "interest-only" retirement phase.
It is worth mentioning that these calculations do not consider factors such as inflation, taxes, or additional income from Social Security or a 401(k) investment plan.
For a comprehensive breakdown of the necessary savings required to achieve annual retirement income goals of $80,000, $90,000, or $100,000, detailed information is available.
In conclusion, by starting early and taking proactive steps towards retirement planning, you can pave the way for a fulfilling future. While Social Security can provide some support, relying on personal savings and investments is crucial. The provided calculations offer estimates for the savings required to achieve specific retirement income goals. Keep in mind that these calculations make certain assumptions and do not account for various factors that can affect your retirement finances.
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